Swampyville's - "Bretton Woods System of Monetary Management"
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Oct 04, 2011 | 1707 views | 0 0 comments | 35 35 recommendations | email to a friend | print | permalink

Ask the Politically Correct!


What was the Bretton Woods System of Monetary Management?

Politically Correct Resolution:

The Bretton Woods system of monetary management established

the rules for commercial and financial relations among the

world's major industrial states in the mid 20th century.

The Bretton Woods system was the first example of a fully

negotiated monetary order intended to govern monetary relations

among independent nation states (Political Economic Internationalism).

Preparing to rebuild the international economic system as World

War II was still raging, 730 delegates from all 44 Allied nations

gathered at the Mount Washington Hotel in Bretton Woods, New

Hampshire, United States, for the (United Nations Monetary and

Financial Conference). The delegates deliberated upon and signed

the Bretton Woods Agreements during the first three weeks of July 1944.

(One month after D-Day, 6 June 1944)

Setting up a system of rules, institutions, and procedures to

regulate the international monetary system, the planners at

Bretton Woods established the International Monetary Fund (IMF)

and the "International Bank for Reconstruction and Development "

(IBRD), which today is part of the World Bank Group. These

organizations became operational in 1945 after a sufficient

number of countries had ratified the agreement.

The chief features of the Bretton Woods system was an

obligation for each country to adopt a monetary policy that

maintained the exchange rate by "tying its currency to the U.S.

dollar" (Wall Street Bankers) and the ability of the IMF to bridge

temporary imbalances of payments.

The seminal idea behind the Bretton Woods Conference was the notion of

open markets. In Henry Morgenthau's farewell remarks at the conference,

he stated that the establishment of the IMF and the World Bank marked the

end of (economic nationalism). This meant countries would maintain their

national interests, but trade blocks and economic spheres of influence

would no longer be their means. The second idea behind the Bretton Woods

Conference was (joint management of the Western political economic order).

Meaning that the foremost industrial democratic nations must lower barriers

to trade and the movement for International settlements of World War Two


On August 15, 1971, the United States unilaterally terminated

convertibility of the dollar to gold. As a result, "the

Bretton Woods system officially ended and the dollar became fully

"fiat currency (funny money)", backed by nothing but the promise of

the federal government. "This action, referred to as the Nixon shock",

created the situation in which the United States dollar became the

sole backing of currencies and a reserve currency for the member states.

A high level of agreement among the powerful on the goals and means

of international economic management facilitated the decisions reached

by the Bretton Woods Conference. Its foundation was based on a shared

belief in capitalism. Although the developed countrie's governments

differed in the type of capitalism they preferred for their national

economies (France, for example, preferred greater planning and state

intervention, whereas the United States favored relatively limited

state intervention), all relied primarily on market mechanisms

and on private ownership.

Thus, it is their similarities rather than their differences that

appear most striking. All the participating governments at Bretton

Woods agreed that the monetary chaos of the interwar period had

yielded several valuable lessons.

The experience of the Great Depression was fresh on the minds of public

officials. The planners at Bretton Woods hoped to avoid a repeat of the

debacle of the 1930s, when intransigent insistence by creditor nations

on the repayment of Allied war debts and reparations, (combined with

an inclination to isolationism), led to a breakdown of the international

financial system and a worldwide economic depression. The "beggar

thy neighbor" policies of 1930s governments, using currency devaluations

to increase the competitiveness of a country's export products to reduce

balance of payments deficits worsened other nation's deflationary spirals,

which resulted in plummeting national incomes, shrinking demand, mass

unemployment, and an overall decline in world trade. Trade in the 1930s

became largely restricted to currency blocs (groups of nations that use

an equivalent currency, such as the "Sterling Area" of the British Empire).

These blocs retarded the international flow of capital and foreign investment

opportunities. Although this strategy tended to increase government revenues

in the short run, it dramatically worsened the situation in the medium and

longer run. (In that there were no great profits from World War One, the

system would be changed after World War Two to allow for greater profits

and less trade restrictions)!

Thus, for the international economy, planners at Bretton Woods all

favored a regulated system, one that relied on a regulated market

with tighter controls on the value of currencies. Although they

disagreed on the specific implementation of this system, all agreed

on the need for tighter controls of the money supply. (Wikipedia)

The main gist of an International Political Economic System is not about

raising Third World Countries to a First World status; but rather,

lowering First World Counteries to a Third World status. By doing

so, destroying what is left of the current Middle Class!

With destruction of the United States isolationism came the seeds for

another Chapter of Global Economic domination by the International

Financial Interests!


(Profit from War)

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